How to Stop a Collection Lawsuit for Debt

Before it becomes a garnishment, levy, repossession, or foreclosure

A lawsuit is simply a creditor asking the judge to agree that you owe money.  That’s it.  You probably do.  So what?  They cannot put you in jail.  They can only ask for the amount of money you actually owe.  Even if the judge does agree, the judge will simply issue a judgment saying that you owe money.  The creditor still has to collect the judgment.  You are not even in trouble.  It is simply official that you owe money.  Well, so what?  Let’s look at what a lawsuit does, and what it cannot do.

How a Lawsuit by a Creditor to Collect a Debt Starts

A lawsuits formally starts when a creditor files a Complaint with the court stating that you owe the creditor money.  In actuality, the collection lawsuit starts long before this.  When you stop paying monthly payments, the creditor will start the collection process.  This is just where the collection of debt ends up.

The Complaint, and the Summons

The two documents needed for a creditor to file a collection lawsuit for debt are called the Summons and Complaint.  The Complaint is just a detail of why the creditor thinks you owe the debt.  The Summons is just a document from the court telling you to come to court.  Even if you don’t come to court, you are not in trouble.  The worst thing that can happen is that the creditor will be awarded a judgment against you.  If you owe the debt, that was probably going to happen anyway.  However, the judgment might be worse if you don’t show up.  See below.

Service of Process – Getting Served to Know About the Suit

The biggest complaint, by far, is that there was a judgment or a garnishment, and you never Knew!  This happens all the time.  There are several ways for this to happen.

As part of the debt collection process, the creditor has to let you know that you have been sued trying to collect a debt.  This is called Service of Process.  Someone will try to serve you in person.  This means that someone will try to come to your home or work, or anywhere they can find you.  The creditor will hand you some papers and say their favorite line and try to sound tough.  “You’ve been served.”  It is not as meaningful as they want it to be.  Process servers cannot trespass on your property, or break any other laws in order to serve you.  If you live in a gated area, unless they are allowed by whomever guards the gate, they cannot serve you there.  Regardless, it is a scary and intimidating moment.  Somebody comes to your door and tells you, “You’ve been served.”  This has very little meaning, and is easy to handle.  Don’t let it get to you.  All it means is that you now officially know about the case.

Unfortunately, there are many ways to get “good” service.  There are many ways which satisfy the court that you know about the lawsuit.  If you cannot be personally served, the court might allow “alternative service.”  This means that the court will be satisfied that you know about the suit if it is taped to the door of your last residence, or even published in some newspaper that you are almost certain not to read.  Creditors will convince the court to do this in unscrupulous ways.  The creditor will tell the judge they cannot seem to serve you, even if they have not tried.  They will tell the judge that you are trying to avoid being served, even if they don’t know.  Regardless, they are the only ones talking to the judge at this point, so the judge is likely to let them serve you using alternative service.  It’s not fair, but it’s the law.

The Creditor Lawsuit to Collect a Debt

You have an opportunity to defend yourself against any lawsuit.  If you actually owe the debt, there is not a lot of defense.  If you don’t know about the lawsuit, it is even easier.  There is usually not a lot of work on the part of the creditor to get a judgment.

Affirmative Defenses – Statute of Limitations – Too old to collect

Another big complaint of debtors who end up with judgments and garnishments is that the debt should be too old to collect.  Unfortunately, the court will not look at this issue unless you bring it up.  It is called an Affirmative Defense.  This means that not only do you need to bring it to the court’s attention, but you need to do it in the First Responsive Pleading.  This means the first time you have an opportunity, you need to tell the court that the debt is too old.  However, if you never get the opportunity to talk to the court, you never get to raise the defense.  This is a creditor trick to collect old debt.  This is why the creditor plays service of process games.

Lawsuit for an old Repossession

Repossession lawsuits have a long memory.  Like no other lawsuit, these things can come from nowhere.  Whole businesses are made from collecting debts from decades ago.  They are too old to collect, but creditors abuse the court process.  It is a horrible abuse of the system.  Regardless, once they have a judgment, they are free to collect.  It is difficult to get a judge to set aside an old judgment.  The judge assumes you owed the debt anyway, and letting you back into court will simply delay the inevitable.  The repossession of the car is bad enough.  The lender takes the car and sells it to a friend in a “commercially reasonable manner.”  However reasonable, this still leaves a balance of sometimes tens of thousands of dollars.  If it was so commercially reasonable, how did you owe so much more than the car was worth!  The worst part is that most of the debt comes from the attorney’s fees, and not even from the repossession of the car.

Garnishment to Collect a Debt – Defenses, Statute of Limitations Old Debt

Once there is a judgment, that part of the lawsuit is over.  The next phase is the collection of that debt.  The first time you might hear of the lawsuit or the garnishment might be when the money is taken out of your check.  This is not how it is supposed to happen, but it frequently does.  When a garnishment starts, your employer will receive the request from the creditor to take money from your check.  Your employer is supposed to give you notice.  This notice will provide you an opportunity to talk to the judge about the amount the creditor is taking from you check.  That is about all you can talk about.  Any defenses or procedural flaws had to be addressed during the trial part of the case.  There is a time and a place for everything, and the trial is over.  Now you are just dealing with the collection.  Therefore, it is not like you will convince them not to garnish.  You might convince them to garnish less at a time.  This just means you will be paying longer.  There is no good solution to this.

How to Stop Collection Lawsuit for Debt

  1.  Quit your job.  If you no longer work there, they cannot garnish.  However, depending on your affinity for eating, you will need another job.  Eventually, the creditor is going to find you.  This might not be the best solution.
  2. Offer to settle.  If you have a lump sum of money available, which you probably don’t or you wouldn’t be getting garnished, you could offer to settle the debt.  Of course the creditor has already done all of the work getting a judgment.  The incentive to settle will not be much for the creditor.
  3. Work as a slave.  You could continue to work and let the creditor take 25% of your gross income.  This will usually result in a decrease of more than a quarter of your take home pay.  This is even harder to do if the creditor has taken advantage of you and the system, just to make money.
  4. Discharge in Bankruptcy.  You could decide that enough is enough.  Working your way out of a garnishment is so difficult it is not even that realistic.  Debt negotiation will not stop a garnishment.  However, a bankruptcy can stop a garnishment the same day.  It will almost always allow you to not pay any of the debt being garnished.  Better yet, it can let you not repay any of your unsecured debt, and still keep your car, home, and all of your stuff.  It is the best solution.  Contact Us.